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Salter Working Paper Number 9

Suggested Revisions to the SALTER Model by Randall Wigle and Carlo Peroni is Working Paper number 9 in the development of The SALTER Model of the World Economy.

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CONTENTS

1   Modeling the Rest of World

2   Reconciliation of Trade-Related Service Flows
2.1   Previous SALTER Implementation
2.2   Implementation of Proposed Change
2.3   Other Remarks
2.4   Trade Margins as Insurance and Freight

3   International Investment Flows
3.1   Introduction
3.2   Shoven-Whalley (GEMTAP) Approach for Closed Economy
3.2.1   Limitations
3.3   Extension to International Capital Mobility
3.3.1   Mechanical Implementation of GEMTAP Formulation
3.4   Investment with Decreasing MEI by Region
3.4.1   Decreasing returns to investment
3.4.2   Implementation with internationally homogeneous investment
3.4.3   Evaluation
3.4.4   Closures

4   Financial Flows
4.1   Factor Service Income
4.2   Government Borrowing
4.3   Debt Service and Issuance
4.4   Budget Deficit
4.5   Income Determination
4.6   Allocation of Savings
4.7   The Balance of Payments

5   Long Run Closure with International Investment and Financial Flows
5.1   Overview: Sequenced Static Solutions
5.1.1   Capital Stock
5.1.2   International Equity
5.1.3   Holdings of Public Debt
5.2   Other Time-Related Magnitudes
5.2.1   An Alternative Solution Concept

6   Data Balancing
6.1   National Data
6.2   Foreign Transactions
6.3   Trade Flows Balance with Freight

7   Assorted Observations and Queries
7.1   Specific Remarks on [4]
7.2   Transportation Again
7.3   Trade Aggregation
7.4   Price Indeces in SALTER

Appendix A   Previous Model Treatment of Freight

Appendix B   Notes on the Balance of Payments
B.1   National Income Accounting
B.2   Balance of Payments Accounting

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